Steve Lockwood doesn't need to review an economic impact study or read a housing report to understand how foreclosures have taken a toll on the community where he works.

As executive director of the Frayser Community Development Corp., Lockwood experiences it daily when he drives past shuttered, dilapidated homes. He sees it in the weary faces of people holding tissues to wipe back tears as they ask for help.

The foreclosure problem has become so rampant that Lockwood's office sometimes doesn't have enough staff members to deal adequately with all the people who have lost their homes or soon will.

"We are feeling really flooded here," he said. "The word is getting out, so the demand for foreclosure counseling services is pretty awesome. But there are very few qualified, ethical counselors in town, so we're feeling swamped and so is everyone else who's doing it."

Bleak landscape

Shelby County has - and likely will continue to have - a need for many foreclosure counselors. In January 728 foreclosures were recorded in the county, according to the most recent data from real estate information company Chandler Reports, www.chandlerreports.com.

Residential foreclosures led the way with 680, while there were just six commercial foreclosures for the month. Another 42 were unknown or other property types.

On the residential side, 622 were for single-family homes, followed by 26 planned unit developments, 15 zero-lot line, 11 condominiums, two vacant land types and two duplex foreclosures.

The two areas most affected were Frayser's 38127 ZIP code with 69, and Raleigh's 38128 ZIP code with 55, numbers that don't surprise Lockwood. But, as he's quick to point out, foreclosure is no longer limited to those parts of town.

"The ones that are increasing the most quickly are the high-value, suburban ZIP codes," he said. "I think that's where the damage is starting to be felt, especially since those houses are so much higher in value that they're hurting the bank more and hurting the city and county more."

Indeed, Cordova's two ZIPs - 38016 and 38018 - combined for more than 50 foreclosures, and the Southeast Shelby County ZIP of 38125 had 42.

Ride this 'wave'

A continuing problem in the continuing foreclosure fiasco stems from adjustable-rate mortgages (ARMs), which resulted in 194 residential foreclosures and one commercial in January.

ARMs have wreaked havoc in the residential real estate market since the middle of last year. A rise in subprime lending during 2004-2005 allowed numerous homebuyers to buy more house than they could afford with ARM products, which featured a low teaser interest rate and corresponding low monthly payment.

But, after two years, the interest rates on those mortgages reset, meaning borrowers often could no longer afford the monthly payments. The end result was a rash of foreclosures, and the mortgage industry responded by tightening guidelines so much that fewer applicants have qualified for loans in the past few months.

With plenty of subprime borrowers here, Memphis consistently ranked near the top of metro areas for foreclosures per capita, according to Irvine, Calif.-based RealtyTrac Inc.

As Dr. John Gnuschke, director of the Sparks Bureau of Business and Economic Research/Center for Manpower Studies and a professor of economics at the University of Memphis, told The Daily News recently, foreclosures should continue throughout 2008.

They will be especially rampant in neighborhoods such as those in Raleigh and Frayser, where home values already have been diminished.

"New modest and existing low-cost neighborhoods will be the hardest hit by foreclosures because those were the areas of the city where subprime and other mortgages were most prominent," Gnuschke said. "Home price declines in many areas of the community will accelerate in 2008 in the face of a flood of 'For Sale' signs with price reduction attachments."

But the problem will continue hitting other communities as well.

"It's a tremendous problem," Lockwood said. "And I expect Frayser to not lead Shelby County in foreclosures this year. I think the wave is heading east."